119-HR-1849 Journalist Public Summary
119 · HR 1849 Disaster Mitigation and Tax Parity Act of 2025
H.R. 1849 would stop the IRS from taxing state or state‑regulated grants that help homeowners harden their homes against windstorms, earthquakes, or wildfires—treating them like similar FEMA/NFIP mitigation funds already excluded from income. (congress.gov)
Headline Summary
A bipartisan bill to make state disaster‑mitigation grants tax‑free for homeowners, aligning them with existing federal treatment. (congress.gov)
What It Does
- The bill excludes from federal income tax any “qualified catastrophe mitigation payment” made under a state, local, or state‑regulated program (including certain market‑of‑last‑resort insurers) when the money pays for property improvements that reduce damage from windstorms, earthquakes, or wildfires. It also prevents these excluded payments from increasing the property’s tax basis. The exclusion applies retroactively to tax years beginning after December 31, 2020, with an option to amend returns. (congress.gov)
- Why it matters: Today, FEMA/NFIP mitigation grants are tax‑free under Internal Revenue Code §139(g), but similar state‑based grants are generally taxable—creating a parity gap this bill aims to close. Research finds mitigation spending delivers large paybacks by reducing future losses. (law.cornell.edu)
Who’s For It
- House sponsors and backers: Rep. Doug LaMalfa (R‑CA) with bipartisan support from Reps. Mike Thompson (D‑CA), Greg Murphy (R‑NC), Jimmy Panetta (D‑CA), and others. Their stated goal is to remove unexpected federal taxes on state mitigation rebates. (lamalfa.house.gov)
- Senate companion: Led by Sens. Thom Tillis (R‑NC) and Alex Padilla (D‑CA), with bipartisan co‑sponsors including Sens. Cassidy, Schiff, Hickenlooper, Britt, Kennedy, Wicker, Bennet, Merkley, Klobuchar, and Budd. (congress.gov)
- Local government and insurance‑agent groups: National Association of Counties and the Independent Insurance Agents & Brokers of America (“Big I”) have publicly supported the concept of excluding state mitigation payments from income. (naco.org)
Who’s Against It
No formal, organized opposition is on the record as of February 5, 2026. Potential concerns you may hear: tax exclusions reduce federal revenue; benefits may tilt toward homeowners with means in hazard‑prone areas; and some analysts prefer refundable credits (which reach more low‑income households) over exclusions. These are general critiques of housing‑related tax expenditures, not specific opposition filings on H.R. 1849. (taxpolicycenter.org)
What’s Next
Status: H.R. 1849 remains at the “Introduced” stage in the House and is in the Ways and Means Committee; on February 4, 2026, Rep. Murphy was granted first‑sponsor status for purposes of adding co‑sponsors and reprints. In the Senate, the companion bill S. 336 was referred to the Finance Committee. (congress.gov)
Discussion